NORTHERN CALIFORNIA MEDICAL PORTFOLIO

MEDICAL OFFICE PORTFOLIO INVESTMENT OPPORTUNITY

NORTHERN CALIFORNIA

MEDICAL PORTFOLIO

4350 LA JOLLA VILLAGE DRIVE, SUITE 450, SAN DIEGO, CA 92122

T. 858.552.7690 | WWW.HFFLP.COM

NORTHERN CALIFORNIA

MEDICAL PORTFOLIO

AVAILABLE INDIVIDUALLY, IN COMBINATION, OR AS A SINGLE PORTFOLIO

Diverse Roster of Investment Grade & Hospital Tenants Sutter Health, Dignity Health, Saint Louise Regional Hospital & Quest Diagnostics

Balanced Investment Opportunity

Strong Leasing Velocity

Attractive Basis, Priced Significantly Below Replacement Cost

Strategic Medical Office Locations

Healthcare Industry Consolidation Driving Future Credit Enhancements

2 • EXECUTIVE SUMMARY

INVESTMENT OVERVIEWHolliday Fenoglio Fowler, L.P. (“HFF”), as the exclusive advisor, is pleased to offer qualified investors

an opportunity to purchase individually, in combination, or as a single portfolio, a 100% fee simple

interest in the Northern California Medical Portfolio (“the Portfolio”). Currently 82% leased, the

Portfolio consists of three well maintained medical office buildings (“Properties” or individually

referred to as “Property”) totaling ±122,403 square feet as-leased and ±126,680 based on a recent

remeasurement. Located in three stabilized and emerging Northern California submarkets, the

Portfolio offers an investor a rare opportunity to acquire a sizeable medical office portfolio with

significant hospital and credit tenancy, at a substantial discount to replacement cost.

Additionally, investors will have the ability to expand or establish a significant presence in Northern

California in assets with a diversified and committed tenant roster, below market rents, and the

opportunity to grow cash flow through the lease-up of approximately 22,343 square feet of existing

vacant space.

ST. GEORGE MEDICAL CENTER

FOLSOM HEALTH & WELLNESS CENTER

SOUTH VALLEY MEDICAL PAVILION

ADDRESS6620 Coyle Avenue

Carmichael, CA 956082575 E Bidwell St

Folsom, CA 956309460 No Name Uno Road

Gilroy, CA 95020

SUBMARKET Carmichael Folsom Gilroy

NRA (Remeasured) 53,057 N/A 36,583

NRA (As-Leased) 52,311 37,040 33,052

% OF PORTFOLIO NRA 42.7% 30.3% 27.0%

% LEASED 68.4% 90.6% 93.0%

MAJOR TENANTS Sutter Health, Dignity Health, Quest Diagnostics, LabCorp

Sutter Health, Performance Physical Therapy

Saint Louise Regional Hospital, Foothill Health Center,

Fritter & Schulz

% OF CREDIT/HOSPITAL TENANCY 66.8% 67.2% 12.4%

EXECUTIVE SUMMARY • 3

INCLUDED IN THE OFFERING

*Based on a recent remeasurement

ST. GEORGE MEDICAL CENTERA 53,057* square foot, value-add, Class A medical office building located just steps away from Mercy San Juan Hospital in Carmichael, California. Currently 68% leased, the property features two-thirds credit tenancy to some of the most respected names in healthcare: Dignity Health (Moody’s: A3), Sutter Health (Moody’s: Aa3), Quest Diagnostics (Moody’s: Baa2), and LabCorp (Moody’s: Baa2).

FOLSOM HEALTH & WELLNESS CENTERA 37,040 square foot, newly constructed, Class A medical office building with two-thirds credit tenancy to Sutter Health (Moody’s: Aa3) in the emerging market of Folsom, California. This state-of-the-art medical facility has seen extraordinary leasing momentum over the past year, including a 4,359 square foot expansion of Sutter Health.

SOUTH VALLEY MEDICAL PAVILIONA 36,583 square foot, multi-tenant medical office building currently 93% leased on the campus of Saint Louise Regional Hospital in Gilroy, California. The Property features hospital tenancy, an on-site pharmacy, and a highly accessible location off of Route 101.


INVESTMENT HIGHLIGHTSDIVERSE ROSTER OF INVESTMENT GRADE AND HOSPITAL TENANTSThe Portfolio’s stable and impressive tenant roster is diversified amongst multiple medical specialties and features a number of highly regarded national and regional tenants including Dignity Health (Moody’s: A3), Sutter Health (Moody’s: Aa3), Quest Diagnostics (Moody’s: Baa2), and LabCorp (Moody’s: Baa2). Complimentary prominent tenants within the Portfolio include Saint Louise Regional Hospital (Verity Health System), Global Cancer Research Institute, and Hanger, Inc. (OTC: HNGR).

BALANCED INVESTMENT OPPORTUNITY Currently 82% leased, the Portfolio offers significant upside potential from the lease up of the vacancy along with the benefit of a stable income stream from the leases in place all in the rapidly recovering Northern California medical office market. New ownership has the opportunity to capitalize on the continued expansion of credit as well as the hospital tenancy within the portfolio, at rising rents within the submarkets. Additional upside potential exists at St. George Medical Center and South Valley Medical Pavilion where tenants are currently being charged on a lower than actual rentable area, substantially increasing potential income when the leases roll over.

STRONG LEASING VELOCITY Medical office tenants are rapidly expanding their presence within Northern California commanding large blocks of space in order to accommodate their growing employee and patient base, making the Northern California Medical Portfolio perfectly positioned to capture the strong demand. Over the past two years, the average occupancy rate for the Portfolio has increased from 70% to 82%. Shrinking availability establishes a landlord favorable market, leading to increased rental rates and reducing the amount of concessions given out.


INVESTMENT HIGHLIGHTS (CONT.)

ATTRACTIVE BASIS, PRICED SIGNIFICANTLY BELOW REPLACEMENT COSTThis offering provides investors the ability to acquire a critical mass of prime Northern California medical office properties at a price well below replacement cost. These assets feature substantial economic barriers-to-entry with medical office market rents needing to more than double to justify new construction. The attractive basis will provide investors the ability to compete at very aggressive rental rates compared to the market and to execute reposition strategies on select assets.

STRATEGIC MEDICAL OFFICE LOCATIONSLow costs have made Sacramento a hub for hospital networks and insurance providers, including Kaiser Permanente, the UC Davis Health System, Sutter Health, Dignity Health, and Health Net. Enrollment in Medi-Cal and purchases of plans via Covered California are running around 10% ahead of expectations, which will bolster the two primary components of the local healthcare industry. At the industry’s base are four not-for-profit health systems, all of which have gone or are going through major expansions.

HEALTHCARE INDUSTRY CONSOLIDATION DRIVING FUTURE CREDIT ENHANCEMENTSContinuing with recent trends, 2016 is already a record setting year for mergers and acquisitions within the healthcare industry. Not lost on the delivery of healthcare services, the overwhelming theme in healthcare real estate continues to be the consolidation of practices, hospitals and health systems. The rapid pace by which investment-rated health systems and provider networks have been acquiring private practice healthcare providers has dramatically bolstered credit within medical buildings across the country. The most coveted private healthcare providers, such as the tenants within the Portfolio, are prime acquisition targets for major healthcare systems competing for market share with their peers. This trend towards consolidation will likely provide future credit enhancements to the Portfolio.


SACRAMENTO

GILROY

• #3 on Fortune’s Hottest Real Estate Markets in 2016

• Sacramento County’s population is expected to grow 17.6% from 2011 to 2021 (SACTO Regional Report)

• 3rd in the U.S. for the percentage of clean economy jobs

• Two major public universities, UC Davis and CSUS

• Gilroy is a planned stop for the proposed High Speed Rail Line from San Francisco to Los Angeles

• From 2008 - 2018, job growth is anticipated to total 21.7%

• Excellent freeway access to the Bay Area, Salinas Valley, and Central California


MEDICAL OFFICE PORTFOLIO INVESTMENT OPPORTUNITY

NORTHERN CALIFORNIA

MEDICAL PORTFOLIO

EVAN KOVACManaging [email protected]. 858.812.2365CA License #01750736

ANDREW MILNESenior Real Estate [email protected]. 858.812.2370CA License #01868031

JOHN [email protected]. 949.798.4108CA License #01904323

PRESENTED BY FOR FINANCING

TRENT JEMMETTReal Estate [email protected]. 858.812.2363CA License #01982473

CHRISTINA PODLESGraphics [email protected]. 858.812.2380CA License #01976856

HFF has been engaged by the owner of the property [properties] to market it [them] for sale. Information concerning the property [properties] described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.

ATLANTA | AUSTIN | BOSTON | CAROLINAS | CHICAGO | DALLAS | DENVER | HOUSTON | INDIANAPOLIS | LOS ANGELES |

MIAMI | NEW JERSEY | NEW YORK CITY | PHOENIX | ORANGE COUNTY (CA) | ORLANDO | PHILADELPHIA | PITTSBURGH |

PORTLAND (OR) | SAN DIEGO | SAN FRANCISCO | TAMPA | WASHINGTON, D.C.

NORTHERN CALIFORNIA MEDICAL PORTFOLIO

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